Monday, August 15, 2005

I was surprised to find Tyler saying the following, in the context of Colorado’s strict spending cap:

I would be surprised if this kind of initiative proved to be a long-run political equilibrium in many states. Voters could simply cut spending by voting for anti-spending politicians [sic], if they were truly convinced of the merits of that position.

Basic public choice theory says otherwise. It’s entirely possible – indeed likely – for a voter to prefer less spending to more spending overall, while nonetheless favoring more spending on her own special interest. Politicians have a systematic incentive to cater to special interests, even when total costs exceed total benefits; politicians who fail to heed the logic of concentrated benefits and diffuse costs will tend to get the boot. Knowing this, any voter who gains less from spending on her own special interest than she loses from the cumulative spending on everyone else’s has good reason to support the global spending cap.

The logic is akin to that of a prisoners’ dilemma: while each player has good reason to act in a selfish fashion that leads to an undesirable outcome for all, each player also has good reason to favor switching to a different game in which selfish play is ruled out.

On the contrary, the public choice theory relies on the voters' rational ignorance and rational non-voting. People's lack of awareness about the effects of particular special interest legislation plays a crucial role in the concentrated-benefit-diffuse-cost logic. It's the alternative theory -- that if what people really want is lower spending they'll just vote for it -- that requires unrealistic assumptions about voters becoming informed.

It is true that a higher level of awareness is required for people to understand what's really happening and support measures (like spending caps and balanced budgets) that will stop it. But that's an easier kind of knowledge to get; it's easier to grasp how special interests work in general than to acquire knowledge about each every one. And I think many people understand it on an intuitive level, as demonstrated by their support for measures like the one in question.